Renault-Nissan, Russian Technologies in deal to control AVTOVAZ
Agam Gupta, MD- Head of FXRC Trading - India at Standard Chartered told NDTV Profit that a mismatch in demand-supply has led to the rupee reaching the 54 per dollar level.
Renault-Nissan and state corporation Russian Technologies have agreed to create a joint venture that will own a 74.5 per cent stake in AVTOVAZ, Russia’s largest car maker.
Renault-Nissan plans to invest $750 million in the joint venture, with the French company contributing $300 million of it, while the remainder will come from the Japanese partner.
The transaction is expected to be completed by 2014.
Renault already owns 25% of AVTOVAZ which it had purchased in 2008. Nissan currently does not own any stake in AVTOVAZ.
Renault-Nissan, AVTOVAZ, Russian Technologies and Troika Dialog, an AVTOVAZ stakeholder, signed the non-binding agreement on Thursday in Paris. According to the memorandum, Renault-Nissan and Russian Technologies will contribute their respective stakes in AVTOVAZ to a joint venture that will control AVTOVAZ, the maker of the iconic Lada brand.
Russian Technologies has agreed to restructure its outstanding loans with AVTOVAZ with approximately $238 million proceeds from the anticipated sale of AVTOVAZ’s non-core assets being used to repay part of Russian Technologies’ loans. The remainder of circa $1.56 billion of interest-free debt is being extended well beyond its current maturity date. This gives AVTOVAZ a strong balance sheet with no liquidity constraints.
“Today’s memorandum is the latest step in an expanding collaboration that helps modernize the leader of Russia’s auto industry,” said Renault-Nissan alliance chairman and chief executive Carlos Ghosn. “Just as Renault and Nissan will continue their technology transfer to AVTOVAZ plants, our AVTOVAZ colleagues will contribute more and more to the Alliance’s multicultural management bench.”